The Home Buying Process
6 Steps Between You and Your Home!
Any way you look at it, the decision to buy a house is yours! Let's first make sure that it's financially feasible.
Can you pay the up-front costs of purchasing a house, as well as the ongoing monthly mortgage and other living expenses? Visit our calculators page to see how much your payments will be!
Good work! By making it to this step, you have decided that you are financially ready to become a homeowner. That's very exciting! It's time to decide on the right loan for you. We have a variety of options for you to choose from!
You also want to begin gathering up all the information you'll need to apply for and to close your loan. Other factors affecting the loan you choose include insurance information and your down payment.
Once you're ready just answer a few questions and we'll provide you with a variety of loan options to help you decide.
Here's what you will need to have/know:
- Name, current address, social security number
- Name(s), and work number(s) of employer(s) for the past two years
- Monthly income for you and your co-borrower (most recent pay stub(s) with year-to-date income)
- Includes bonuses, commissions and overtime income for the past two years (this information is on your tax return)
- If you are self-employed, you will need the last two years' tax returns for the type of business you own:
- Sole Proprietorship (Schedule C)
- Partnership (From 1065)
- Corporation (Form 1120 or 1120s).
- In addition, the last two years' personal tax returns (including K-1s)
- Documentation to support credit history problems (if applicable)
- Can be a written explanation of late payments, bankruptcy (petition and discharge papers), defaults, judgments, and/or liens
- As part of closing, we will have to verify all funds that you receive; so it's a good idea to get together any documents that will verify proof of receipt or deposit for funds
- Examples: gifts and trust accounts
What's the difference?!
Getting pre-qualified is like getting an estimate from a mortgage institution detailing how much of a loan you can likely afford. It serves more as a guide to you of what a lender might require rather than as any official approval by them.
Pre-approval means that you fill out a loan application and provide all your salary and credit information. The lender then checks your assets and pre-approves your capability to get a loan.
Get pre-approved by contacting one of Mortgage Loan Officers today!
Now it's time for the fun part!! Make a list of all the things you want in a home! Be as specific as possible. It will save you time in your search for a new home.
Consider some of the following things:
- Location is everything!
- Will it have a yard?
- If so, what size?
- Do you want a garage?
- Attached? Detached? One, two or three cars?
- How many bedrooms do you need?
- How many bathrooms? (Not just for the immediate future, but for those teenage years, as well.)
- What about a den or office? A guest room for grandparents and out-of-town guests?
- Do you want a basement, an attic or both?
Awesome!! You've found a house you love! Now you have to make an offer, in writing, and submit it to the sellers. This is usually done through your agent and is accompanied by your earnest money, which is a pre-determined amount of money, demonstrating that your offer is “in earnest”.
Follow the advice of your agent or lawyer when deciding how best to make your offer.
Here are examples of some things your offer should include:
- The price you're willing to pay
- When you want to move in
- What kind of inspections you'd like to have
- Examples: structural, electrical, plumbing, etc.
- If your ability to buy the house depends on your ability to get financing (this is taken care of if you're pre-approved by us!)
- The amount of time both you and the seller have to make all these things happen (usually 30 to 60 days)
- The seller usually has 24 to 48 hours to consider your offer or make a counter offer (adjusting your offer)
It is always wise to make your offer “contingent on inspection”. That means that your offer isn't really valid until the home has been carefully examined by a qualified home inspector, who is trained to take a critical look at various aspects of the home including:
- Heating and cooling system
- Electrical system
- Windows and doors
- Exterior grading (to make sure water drains away from house)
You're almost there!! To close the deal on your house you will meet with a representative of the escrow company who is handling your loan. Once the title is recorded, ownership will transfer to you.
What is escrow?!
Escrow is the holding of documents and money (such as a deposit) by a neutral third party prior to closing. Also an account held by the lender into which a homeowner pays money for taxes and insurance.
Here is the place to gain a good understanding of the fees you may be responsible for paying at closing.
Here is a list of fees you should typically expect to pay at closing; there may be more or fewer:
- Done by an independent credit association, to establish your credit rating
- Done by an independent appraiser, to establish the value of the house
- Done by an independent home inspector, to provide information about the integrity of the house (typically not required by the lender)
- To disclose whether there are any liens and encumbrances
- To record the transfer of property with the appropriate government bodies
- To cover the cost of transporting documents between the escrow service and various other entities
Loan Origination Fee
- This is a fee imposed by a lender to cover certain processing expenses in connection with making a real estate loan
- Prepaid finance charges tied to interest rate (the higher the interest rate, the lower the discount points.)
Once this is all taken care of...